Well-designed education finance systems can be the cornerstone of student success. If states create effective and equitable school funding policies, public schools will have the resources they need to serve the needs of all students. But in too many states, the education funding status quo remains inequitable, inadequate, and opaque to all but a few. 

That’s where we come in. 

Bellwether’s Leading Indicator: State Education Finance newsletter brings you the latest research, resources, and expert voices on K-12 state school funding policies during this spring’s state budgetary season and beyond. And we’ll keep an eye on federal-level policies along the way as we provide state policymakers, advocates, and anyone invested in school funding with: 

• Research-based, practical policy analyses and tools from Bellwether and other experts in the field. 
• News from states and the context to better understand it. 
• Perspectives on what makes a school funding reform effective, achievable, and equitable for students and communities. 

As co-leads of Bellwether’s body of work on K-12 state school finance, we offer state advocates and policy leaders training, capacity building, technical assistance, and analysis. Our work is grounded in principles of adequacy (enough funding to achieve state goals), equity (targeted funding to support students and communities that need additional resources), responsibility (clarity on local and state roles), and transparency (policies people can actually understand).   

This will be a big year for education finance. In the months to come, we’ll dive into topics including what makes an equity-driven school finance “win,” federal factors in state school finance, the effects of enrollment decline, and more.  

Thanks for reading and let us know what you think. 

—Jennifer O’Neal Schiess and Bonnie O’Keefe 

The Big Picture: Trends We’re Watching  

As state legislators get down to the business of passing budgets this year, school funding will be a big part of the conversation. Here’s some context we’re thinking about as we monitor state budgets and funding bills: 

• K-12 funding usually makes up one of the largest slices of any state’s budget. State revenue makes up more than 40% of funding that goes to K-12 schools.  
• In the past few years, many states have enjoyed surplus funds, as state revenues exceeded gloomy budgetary forecasts. These surpluses have enabled many states to invest more in schools.  
• Disappointing results from the National Assessment of Educational Progress (NAEP) have reignited conversations about how to best leverage funding to tackle persistent academic gaps. Much of the conversation has been about federal funds, but state funding dwarfs even the historic infusion of the now-expired Elementary and Secondary School Emergency Relief funds.  
• In 2025, big state surpluses are likely to be less common. This could be due to anticipation of an economic downturn. It could also be a situation of state leaders’ own making:  
• When a state cuts taxes, greatly expands funding for private schools, or needs to focus on other critical state priorities (such as health care, public safety, or postsecondary education and workforce development), funding for public education will face substantial pressure.  

State Spotlights: Notable News From Statehouses  

What are governors saying about school funding? With more than 35 inaugural speeches, “state of the state” addresses, and legislative session opening remarks complete, many governors indicate a vague intent to either sustain or increase funding, and a handful of governors have signaled specific priorities related to school funding. 

Comprehensive school funding formula reform is pretty rare (despite a recent uptick with overhauls in Tennessee and Mississippi), but a handful of governors signaled wholesale reform as a priority. 

• Nebraska Gov. Jim Pillen called the state’s school funding formula “broken,” and pledged to establish a blue-ribbon commission to recommend a new model. 
• Virginia Gov. Glenn Youngkin announced a $1 million investment from the existing budget for the state’s Office of Transformation to model a new funding formula, referencing the need to help stakeholders understand its impact. 
• Vermont Gov. Phil Scott prioritized wholesale K-12 funding reform in his inaugural address, citing high property taxes and structural and governance issues with the current system. 

More targeted K-12 formula reform, including adjusting elements within a state’s existing funding formula structure, is more common but hasn’t been a big focus in governors’ agendas so far this year.   

• Colorado Gov. Jared Polis signaled a desire to build on last year’s K-12 efforts by updating the state formula to fund students based on where they are currently enrolled versus enrollment from four years prior. 
• Oregon Gov. Tina Kotek proposed a change to the way the State School Fund is calculated, which would shore up base funding for schools. 

Funding for or against private school choice (e.g., education savings accounts, vouchers) was referenced in a few governor speeches: 

• Kentucky Gov. Andy Beshear referenced the defeat of Amendment 2 at the polls in November and called on policymakers to put the private school choice conversation to bed and focus on public schools.
• Governors in Idaho, New Hampshire, North Dakota, South Carolina, South Dakota, Texas, and Virginia called for new or expanded K-12 private choice funding. 

Several governors mentioned high property taxes in their speeches, though not all of them made the connection to school funding:  

• North Dakota Gov. Kelly Armstrong names property tax reform as her top priority, and Vermont Gov. Scott cites high property taxes as a primary reason he’s calling for school funding reform. 
• Texas Gov. Greg Abbott called for another $10 billion in property tax relief (on top of reductions made last session) and indicated a desire to limit local jurisdictions’ ability to increase taxes. 

And several governors (Indiana, Kentucky, Missouri, Montana, Nevada, South Carolina, Texas, and Virginia) mentioned increasing teacher compensation in various ways in their speeches. So far, no one has talked about teacher retirement benefits or pensions, but it’s a space we’ll continue to watch. 

The bottom line: What governors say in state of the state or inaugural speeches is not the entirety of possible policy actions; governors’ priorities are subject to the legislative process and the political context of each state. But these speeches provide some indication of state priorities heading into legislative sessions in many states. 

We’ll track state actions through legislative sessions and already have our eyes on bills filed in a handful of states. Stay tuned for more. 

Follow the Money: What We’re Reading  

Given what the tea leaves suggest for state school funding policy, these are must-read resources: 

• Enrollment decline is top of mind in many states – our colleagues’ analyses make sense of the issue via data analysis. 
• The National Association of State Budget Officers is compiling state of the state speeches and state revenue forecasts – we’ve got them bookmarked this time of year. 
• EdFund’s new Education Finance Research Library compiles the most policy-relevant takeaways from the fast-growing body of education funding research nationwide.